In the U.S.A., penny stocks are referred to as those stocks that are not traded on any of the major exchanges (AMEX, NASDAQ, NYSE). It is a low-priced, speculative security from a small company usually traded by an "over the counter" listing service or initial public offerings (IBO), such as (OTCBB, Pink Sheets) The beginner penny stock investor may find other terms used that are interchangeable with "penny stock", they are: microcap stocks, nano caps and small caps.

Penny stocks are a high-risk investment and beginner penny stock investors should be prepared to lose their entire investment. Penny stocks are usually capped under $500M and are speculative in nature especially those that are traded under low volumes in "over the counter" listings. The Securities and Exchange commission puts out a warning to those who wish to trade in Penny stocks that "Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them." Penny stocks can also be difficult to get accurate pricing on.

Why would the beginner penny stock investor find penny stocks attractive? They have low purchase prices and have potential for rapid growth that may be seen in just a few days. The risks involved to the penny stock investor are that of limited liquidity, the lack of adequate financial reporting and the fraud that is rampant in this investing field. Investor beware is an apt expression or warning for the beginner penny stock investor.

The OTC BB (OTC Bulletin Board) is a regulated quotation service in the U.S.A. owned by the NASD, for stocks that are not listed on any of the major U.S. stock exchanges. It can be difficult to distinguish between OTC shares and penny stocks. Many shares that do not meet the capitalization requirements of the major stock exchanges end up on the OTCBB which is why you may find the shares of smaller companies or those who are (IBO) being traded here including penny stocks.

Fraud and the Penny Stock

Quick growth potential makes the penny stock prime target for fraud in the form of illegal pump and dump schemes, short-and-distort, and chop stocks. The beginner penny stock investor will need to be aware that fraud is rampant in the form of emails in which stocks are acquired for pennies using Regulation S and then illegally sold to overseas or even domestic retail investors, according to Gary Weiss of "Investors Beware", Business Week (1997).

Summing all this up, beware the lure of quick money by the penny stock hustlers. The only ones making any money are those who have sold these types of stock. If you do invest be cautious, be prudent and always do as much due diligence as possible. One of the best suggestions that I have heard when approached by purveyors of penny stocks is to run not walk away, Invest in recognized firms that are either NASDAQ ,AMEX or NYSE. For these stocks you can usually believe what you are reading.

Penny stocks - The anatomy of a pump and dump

Penny stocks - The anatomy of a pump and dump
HSMpennystocks
7 min - Apr 12, 2008

http://www.hotstockmarket.com - The classic chart of a pump and dump in the penny stock world. Watch and learn to identify this chart, you will save thousands!

Best to Invest in Penny Stocks in Your 20's

Best to Invest in Penny Stocks in Your 20's
TheStreetTV
3 min - Jul 3, 2007

Tim Sykes, a 25 year-old hedge fund manager, gives advice for young investors.

New Penny Stock Money Strategy Doubles Penny Stocks in Minutes

New Penny Stock Money Strategy Doubles Penny Stocks in Minutes

3 min - Mar 26, 2008

http://www.yourreviewpro.com/stocks - Visit our site and receive 2 simple rules that will give you a list of all penny stocks that will double tomorrow http://www.yourreviewpro.com/stocks - penny stocks, doublingstocks, investments, marl, stock market

Profiting from Penny Stocks

Profiting from Penny Stocks

2 min - Jul 29, 2008

http://StockTips.Weebly.com Visit this site if you are interested in profiting from Penny Stocks! Doubling Stocks is a market newsletter written by Michael Cohen that is targeted at profiting from Penny Stocks. Each week, Michael emails the newsletter subscribers with a stock buying recommendation using a unique trading system that has consistently pick winning stocks since the past decade. So is Doubling Stocks effective? You bet! As of September 2007, I have quitted my job and have since recouped all my previous losses. I'm currently earning a 5 digit income monthly by just concentrating only on penny stocks using Doubling Stocks advices. At just $47 for the newsletter, Michael Cohen is really insane to charge you so little for revealing his stock picks & risking his reputation. He should have charged at least $5000 for this newletters. For the record, for over 15 years, subscribers of Doubling Stocks have made untold millions of dollars from the stock picking advice

Investing and Trading: Spammage, Penny Stocks and Mail ...

Investing and Trading: Spammage, Penny Stocks and Mail ...
AirelonTrading
9 min - Jul 7, 2008

My Daily Blog is at: http://investorandtrader.blogspot.com/ If you really want to know what the world of penny stocks is all about? You should be listening to Timothy Sykes. Not to what you receive in the mail ... NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

The Future Hot Medical and Health Stocks are Pennystocks or

MAKE MONEY! With A Penny Stocks Investing Robot !!

MAKE MONEY! With A Penny Stocks Investing Robot !!

2 min - Dec 27, 2007

Exposed !!! Advanced Stock Trading Broker Uncovered His Secret Underground Software, Guarantee to Double Your Profits and Lets You Try it Free for 8 Weeks! www.shurl.net5MB